🦔 Oracle is studying – according to reports – laying off 20 to 30 thousand employees, and may go further by selling Cerner (its healthcare information technology arm) to finance its massive $300 billion contract with OpenAI.
TD Cowen investment bank estimates that the OpenAI deal alone requires $156 billion in capital spending on GPU units and infrastructure.
📉 In contrast, Oracle's credit default swap (CDS) spreads have tripled, indicating that Wall Street sees higher risks of default or liquidity pressures.
💰 The company has started to ask for a 40% upfront payment from customers to secure cash flows, while U.S. banks have pulled back from financing data center projects associated with Oracle.
🔄 Oracle bought Cerner for $28 billion in 2022 as a strategic move towards healthcare data. Selling it now would be a shocking retreat from that path.
My Opinion
I have been writing for months about circular dependencies in AI architecture:
NVIDIA sells chips to those building data centers.
They sign contracts with OpenAI.
OpenAI pays with money raised from investors.
Every budget relies on continued access to capital for everyone.
Now we see what happens when one link starts to break.
Oracle signed a $300 billion contract requiring $156 billion in capital spending. Debt investors are worried. Banks are not lending.
So what’s the result? Considering laying off 30 thousand employees and selling a profitable company bought three years ago, just to generate the liquidity needed to continue building data centers for a company that burns $9 billion a year and does not expect profitability before 2029.
🏥 Oracle paid $28 billion for Cerner. Now it may have to sell it to feed the AI machine.
Hospitals rely on Cerner software to operate.
Those who may lose their jobs are not the ones who made the decision.
Larry Ellison is the one who gambled.
Workers and healthcare systems are the ones paying the price.
⚠️ This is how it happens when companies mortgage their existing businesses to chase the expansions of AI infrastructure that they cannot realistically afford.
Hedgie🤗
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